- Joined
- 3 Nov 2010
- Messages
- 27,833
- Solutions
- 8
- Reaction score
- 38,387
The Reserve Bank of India (RBI) has released master directions for credit and debit card issuance in the year 2022. These fresh guidelines will come into effect from July 1, 2022. The guidelines apply to banks excluding payment banks, state co-operative banks, and district central co-operative banks. Also, all NBFCs operating in India should follow the new norms of card issuance.
Important key highlights:
Customer Acquisition:
1. Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance. If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder.
2. No card-issuer shall report any credit information relating to a new credit card account to Credit Information Companies prior to activation of the card. Any credit information relating to such inactivated credit cards already reported to Credit Information Companies shall be withdrawn immediately; under no circumstances it shall take more than 30 days from the effective date of these directions.
Underwriting Standards:
1. As holding several credit cards enhances the total credit available to any consumer, card-issuers shall assess the credit limit for a credit card customer taking into consideration all the limits enjoyed by the cardholder from other entities on the basis of self-declaration/credit information obtained from a Credit Information Company, as appropriate. This shall be uniformly applied as per the board approved policy of the card-issuer.
2. Card-issuers shall ensure complete transparency in the conversion of credit card transactions to Equated Monthly Instalments (EMIs) by clearly indicating the principal, interest and upfront discount provided by the merchant/card-issuer (to make it no cost), prior to the conversion. The same shall also be separately indicated in the credit card bill/statement. EMI conversion with interest component shall not be camouflaged as zero-interest/no-cost EMI.
3. Card-issuers shall ensure that the credit limit as sanctioned and advised to the cardholder is not breached at any point in time without seeking explicit consent from the cardholder.
Closure of Credit Card:
1. Any request for closure of a credit card shall be honoured within seven working days by the credit card-issuer, subject to payment of all dues by the cardholder. Subsequent to the closure of credit card, the cardholder shall be immediately notified about the closure through email, SMS, etc. Cardholders shall be provided option to submit request for closure of credit card account through multiple channels such as helpline, dedicated e-mail-id, Interactive Voice Response (IVR), prominently visible link on the website, internet banking, mobile-app or any other mode. The card-issuer shall not insist on sending a closure request through post or any other means which may result in the delay of receipt of the request. Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of ₹500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account.
2. If a credit card has not been used for a period of more than one year, the process to close the card shall be initiated after intimating the cardholder. If no reply is received from the cardholder within a period of 30 days, the card account shall be closed by the card-issuer, subject to payment of all dues by the cardholder. The information regarding the closure of card account shall also accordingly be updated with the Credit Information Company/ies within a period of 30 days.
3. Subsequent to closure of credit card account, any credit balance available in credit card accounts shall be transferred to the cardholder’s bank account. Card-issuers shall obtain the details of the cardholder’s bank account, if the same is not available with them.
Billing:
1. Card-issuers shall ensure that there is no delay in sending/dispatching/emailing bills/statements and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged. In order to obviate frequent complaints of delayed billing, the card-issuer may consider providing bills and statements of accounts through internet/mobile banking with the explicit consent of the cardholder. Card-issuers shall put in place a mechanism to ensure that the cardholder is in receipt of the billing statement.
2. Card-issuers shall ensure that wrong bills are not raised and issued to cardholders. In case, a cardholder protests any bill, the card-issuer shall provide explanation and, wherever applicable, documentary evidence shall be provided to the cardholder within a maximum period of 30 days from the date of complaint.
3. No charges shall be levied on transactions disputed as ‘fraud’ by the cardholder until the dispute is resolved.
4. Card-issuers do not follow a standard billing cycle for all credit cards issued. In order to provide flexibility in this regard, cardholders shall be provided a one-time option to modify the billing cycle of the credit card as per their convenience.
5. Any credit amount arising out of refund/failed/reversed transactions or similar transactions before the due date of payment for which payment has not been made by the cardholder, shall be immediately adjusted against the ‘payment due’ and notified to the cardholder.
Issue of unsolicited facilities:
1. Card-issuers shall not unilaterally upgrade credit cards and enhance credit limits. Explicit consent of the cardholder shall invariably be taken whenever there is/are any change/s in terms and conditions. In case of reduction in the credit limit, the card-issuer shall intimate the same to the cardholder.
Reporting to Credit Information Companies:
1. Before reporting default status of a credit cardholder to a Credit Information Company, the card-issuers shall ensure that they adhere to a procedure, duly approved by their Board, including issuing of a seven day notice period to such cardholder about the intention to report him/her as defaulter to the Credit Information Company. In the event the customer settles his/her dues after having been reported as defaulter, the card-issuer shall update the status within 30 days from the date of settlement. Card-issuers shall be particularly careful in the case of cards where there are pending disputes. The disclosure/release of information, particularly about the default, shall be made only after the dispute is settled. In all cases, a well laid down procedure shall be transparently followed and be made a part of MITC.
Customer Conduct:
1. In the matter of recovery of dues, card-issuers shall ensure that they, as also their agents, adhere to the extant instructions on Fair Practices Code for lenders.
2. In particular, with regard to appointment of third-party agencies for debt collection, the card-issuers shall ensure that their agents refrain from actions that could damage their integrity and reputation and observe strict customer confidentiality. All communications issued by recovery agents must contain the name, email-id, telephone number and address of the concerned senior officer of the card-issuer whom the customer can contact. Further, card-issuers shall provide the name and contact details of the recovery agent to the cardholder immediately upon assigning the agent to the cardholder.
3. Card-issuers/their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the credit cardholders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.
Role of co-branding partner entity:
1. The co-branding partner shall not have access to information relating to transactions undertaken through the co-branded card. Post issuance of the card, the co-branding partner shall not be involved in any of the processes or the controls relating to the co-branded card except for being the initial point of contact in case of grievances.
General Conditions:
1. Any discounts, cashbacks, reward points, loyalty points or any other benefits offered by the card-issuer shall be provided in a transparent manner including source of such benefits. The accounting process for the same shall be verifiable in the books of the card-issuer. Detailed information regarding these benefits shall be displayed on the website of the card-issuer and a copy of the same shall also be provided to the cardholder.
Full Master Direction can be found on the following URL: Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022
Important key highlights:
Customer Acquisition:
1. Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance. If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder.
2. No card-issuer shall report any credit information relating to a new credit card account to Credit Information Companies prior to activation of the card. Any credit information relating to such inactivated credit cards already reported to Credit Information Companies shall be withdrawn immediately; under no circumstances it shall take more than 30 days from the effective date of these directions.
Underwriting Standards:
1. As holding several credit cards enhances the total credit available to any consumer, card-issuers shall assess the credit limit for a credit card customer taking into consideration all the limits enjoyed by the cardholder from other entities on the basis of self-declaration/credit information obtained from a Credit Information Company, as appropriate. This shall be uniformly applied as per the board approved policy of the card-issuer.
2. Card-issuers shall ensure complete transparency in the conversion of credit card transactions to Equated Monthly Instalments (EMIs) by clearly indicating the principal, interest and upfront discount provided by the merchant/card-issuer (to make it no cost), prior to the conversion. The same shall also be separately indicated in the credit card bill/statement. EMI conversion with interest component shall not be camouflaged as zero-interest/no-cost EMI.
3. Card-issuers shall ensure that the credit limit as sanctioned and advised to the cardholder is not breached at any point in time without seeking explicit consent from the cardholder.
Closure of Credit Card:
1. Any request for closure of a credit card shall be honoured within seven working days by the credit card-issuer, subject to payment of all dues by the cardholder. Subsequent to the closure of credit card, the cardholder shall be immediately notified about the closure through email, SMS, etc. Cardholders shall be provided option to submit request for closure of credit card account through multiple channels such as helpline, dedicated e-mail-id, Interactive Voice Response (IVR), prominently visible link on the website, internet banking, mobile-app or any other mode. The card-issuer shall not insist on sending a closure request through post or any other means which may result in the delay of receipt of the request. Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of ₹500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account.
2. If a credit card has not been used for a period of more than one year, the process to close the card shall be initiated after intimating the cardholder. If no reply is received from the cardholder within a period of 30 days, the card account shall be closed by the card-issuer, subject to payment of all dues by the cardholder. The information regarding the closure of card account shall also accordingly be updated with the Credit Information Company/ies within a period of 30 days.
3. Subsequent to closure of credit card account, any credit balance available in credit card accounts shall be transferred to the cardholder’s bank account. Card-issuers shall obtain the details of the cardholder’s bank account, if the same is not available with them.
Billing:
1. Card-issuers shall ensure that there is no delay in sending/dispatching/emailing bills/statements and the customer has sufficient number of days (at least one fortnight) for making payment before the interest starts getting charged. In order to obviate frequent complaints of delayed billing, the card-issuer may consider providing bills and statements of accounts through internet/mobile banking with the explicit consent of the cardholder. Card-issuers shall put in place a mechanism to ensure that the cardholder is in receipt of the billing statement.
2. Card-issuers shall ensure that wrong bills are not raised and issued to cardholders. In case, a cardholder protests any bill, the card-issuer shall provide explanation and, wherever applicable, documentary evidence shall be provided to the cardholder within a maximum period of 30 days from the date of complaint.
3. No charges shall be levied on transactions disputed as ‘fraud’ by the cardholder until the dispute is resolved.
4. Card-issuers do not follow a standard billing cycle for all credit cards issued. In order to provide flexibility in this regard, cardholders shall be provided a one-time option to modify the billing cycle of the credit card as per their convenience.
5. Any credit amount arising out of refund/failed/reversed transactions or similar transactions before the due date of payment for which payment has not been made by the cardholder, shall be immediately adjusted against the ‘payment due’ and notified to the cardholder.
Issue of unsolicited facilities:
1. Card-issuers shall not unilaterally upgrade credit cards and enhance credit limits. Explicit consent of the cardholder shall invariably be taken whenever there is/are any change/s in terms and conditions. In case of reduction in the credit limit, the card-issuer shall intimate the same to the cardholder.
Reporting to Credit Information Companies:
1. Before reporting default status of a credit cardholder to a Credit Information Company, the card-issuers shall ensure that they adhere to a procedure, duly approved by their Board, including issuing of a seven day notice period to such cardholder about the intention to report him/her as defaulter to the Credit Information Company. In the event the customer settles his/her dues after having been reported as defaulter, the card-issuer shall update the status within 30 days from the date of settlement. Card-issuers shall be particularly careful in the case of cards where there are pending disputes. The disclosure/release of information, particularly about the default, shall be made only after the dispute is settled. In all cases, a well laid down procedure shall be transparently followed and be made a part of MITC.
Customer Conduct:
1. In the matter of recovery of dues, card-issuers shall ensure that they, as also their agents, adhere to the extant instructions on Fair Practices Code for lenders.
2. In particular, with regard to appointment of third-party agencies for debt collection, the card-issuers shall ensure that their agents refrain from actions that could damage their integrity and reputation and observe strict customer confidentiality. All communications issued by recovery agents must contain the name, email-id, telephone number and address of the concerned senior officer of the card-issuer whom the customer can contact. Further, card-issuers shall provide the name and contact details of the recovery agent to the cardholder immediately upon assigning the agent to the cardholder.
3. Card-issuers/their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the credit cardholders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.
Role of co-branding partner entity:
1. The co-branding partner shall not have access to information relating to transactions undertaken through the co-branded card. Post issuance of the card, the co-branding partner shall not be involved in any of the processes or the controls relating to the co-branded card except for being the initial point of contact in case of grievances.
General Conditions:
1. Any discounts, cashbacks, reward points, loyalty points or any other benefits offered by the card-issuer shall be provided in a transparent manner including source of such benefits. The accounting process for the same shall be verifiable in the books of the card-issuer. Detailed information regarding these benefits shall be displayed on the website of the card-issuer and a copy of the same shall also be provided to the cardholder.
Full Master Direction can be found on the following URL: Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022
